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September 2015

Daily Currency Insight

Published: Tuesday 22 September 2015

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There was very little in the way of data released yesterday so currencies were swayed by comments and rhetoric. There had been hawkish talk over the weekend from a couple of Fed speakers and that was continued when James Bullard and Dennis Lockhart both emphasised that they expect that policy tightening would begin this year and that the decision to leave rates on hold in September was a "close call". Markets have been caught flat footed and scrambled to purchase dollars on the news. Both the Euro and the Pound are weaker and with little tier one data due today and Lockhart again due to take to the wires the current trend may prevail.

The Pound was already under a little pressure particularly versus the dollar after Friday's speech from Bank of England Chief economist Haldane where he indicated that perhaps policy would need to remain loose in order to combat low inflation. This was at odds with most of his colleagues and Governor Carney who has already stated that he believes that things will become clearer by the end of the year and that the next move will most likely be a rise from the current emergency levels. Today's borrowing data is not likely to trouble investors and I expect us to remain in recent ranges for the time being.

The Euro was the biggest loser yesterday on expectations that the European Central Bank could increase or extend quantitative easing. With little of note due to be released form the Eurozone today traders will be looking at comments from ECB members for any clues for near term direction. Technically the single currency looks vulnerable and the next level of support is 1.1150 which was the low at the end of August. For now any rally will surely be limited.